Hot money slumps

HOT money inflows slumped in the first two weeks of October as investors flew to safety amid fears Europe’s debt crisis would erode global economic recovery.

Preliminary data from the Bangko Sentral ng Pilipinas showed that as of October 14, transactions in foreign portfolio investments yielded net inflows of $10.74 million, but were 94 percent lower than the $172.73 million in the same period last year.

The BSP said the decline was driven by the bearish sentiments toward emerging markets at a time when the euro zone had yet to find concrete solution for its debt woes.

Inflows reached $174.15 million, but outflows hit $163.41 million or 10.3 percent higher than the $148.18 million last year.

Year-to-date, hot money transactions resulted in net inflows of $3.266 billion, still up 77 percent from the $1.845 billion a year ago.

But outflows were up by 70.3 percent to $10.439 billion compared with $6.13 billion last year, with the bulk representing withdrawals from interim peso deposits.

Major beneficiaries of hot money inflows were listed holdings firms, property companies, banks, telecommunication firms and utility companies.

Outflows were mostly directed to the US, the BSP said.

According to the central bank, the top investor countries were Singapore, Luxembourg, the United Kingdom, the US, and Hong Kong.

Registration of inward foreign investments with the BSP is voluntary and entitles the investor or their representative to buy foreign exchange from authorized agent banks and/or their subsidiary/affiliate foreign exchange corporations for repatriation of capital and remittance of dividends/ profits/earnings that accrue on the registered investment.